Speaking of insurance-related stocks, I'd like to share some info on a wonderful company: RNR, RenaissanceRe, a global re-insurer that I've been investing in for about 4 years now. The price is now around $70 - may no longer be the complete steal it was in early 2000, but still solid value in my opinion, and an especially good counterweight to my normally tech-heavy portfolio. Here's an excellent summary lifted from S&P Ratings below.
Cheers,
Kevyn
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1. Very strong operating performance. RNR has extremely strong operating performance, with an ROR and an ROE in 2000 of 41% and 20%, respectively. RNR's five-year average ROR is 45% despite the industry-wide catastrophe loss activity in that period. RNR's operating performance exceeds those of its specialist peer group and the reinsurance industry in general.
2. Strong business position. Although most of RNR's insurance liabilities are associated with property catastrophe exposures, it has broadened its business position from strictly property catastrophe risk bearing.
Based on its competitive advantage in catastrophe modeling, it outsources its expertise in a variety of ways, including establishing a fee-income managed-catastrophe-risk business that allows it to write risk on the capital base of third parties.
3. Conservative reserving. RNR has historically been well reserved despite the short-tailed nature of its liabilities.
4. Potential volatility in operating results. As a property catastrophe writer, RNR bears considerable exposure to high-severity catastrophe events and therefore is subject to volatility in its operating results. This risk has been mitigated in recent years by its very strong catastrophe modeling skills but remains a key rating factor.
5. Active capital management. RNR has remained independent, is publicly traded, and has a smaller capital base than some of its competitors. It has opportunistically repurchased shares as its resources allow and when its share price dips. |
